System and method for outsource supplier management

Abstract

A system and method for is provided for outsource supplier management that facilitates improved order communication between customers, sellers and outsource suppliers. During order processing the supplier management system automatically receives the order from the customer and passes the order to the outsource supplier along with order, material and shipping parameters. The outsource supplier ships the product directly to the customer using the parameters provided with the order. When the product is shipped from the outsource supplier, shipment data is sent from the outsource supplier to the seller. The seller virtually receives the parts in the seller's inventory, and creates an invoice to pay the outsource supplier. The original order from the customer is matched with the virtual inventory and the product is virtually shipped from the seller to the customer. The customer is then invoiced by the seller or outsource supplier depending on customer requirements.

Description

FIELD OF THE INVENTION [0001] This invention generally relates to inventory control systems, and more specifically relates to outsource supplier management. BACKGROUND OF THE INVENTION [0002] To be effective, modern inventory distribution systems require the ability to provide the right inventory at time and manner required by the customer. In traditional systems, inventory is stored by the seller delivered from the seller to the customer as needed. This provides the ability to deliver product to the customer as needed. Unfortunately, this type of inventory system also results in increased inventory carrying costs, including costs for inventory facilities, transaction costs, and the costs associated with money tied up in inventory. In some industries, the costs of carrying large amounts of inventory can be prohibitive. [0003] In these industries a more effective model is one where the sellers inventory is minimized, while the seller maintains the ability to effectively deliver produ...

AI Technical Summary

Benefits of technology

[0005] The present invention provides a system and method for outsource supplier management. The system and method facilitates improved order communication between customers, sellers and outsource suppliers. Specifically, during order processing the supplier management system automatically receives the order from the customer and passes the order to the outsource supplier along with order, material and shipping parameters. The outsource supplier ships the product directly to the customer using the parameters provided with the order. When the product is shipped from the outsource supplier, shipment data is sent from the outsource supplier to the seller. The seller virtually receives the parts in the seller's inventory, and creates an invoice to pay the outsource supplier. The original order from the customer is then matched with the virtual inventory and the product is virtually shipped from the seller to the customer. The customer can then be invoiced by the seller or outsource supplier depending on customer requirements. Thus, the system and method is able to facilitate efficient order processing.

[0006] The system and method also facilitates changes to existing orders. Specifically, when the customer requests a change in a pending order, the system determines if the change requires notification to the outsource supplier. If the outsource supplier needs to be notified of the change, the seller sends a purchase order change request to the outsource supplier. The outsource supplier then determines if the change can be made, and processes the order change if possible. The outsource supplier then sends a change acknowledgement to the seller, which confirms that the order change has been made by the outsource supplier. Thus, the system and method is able to react quickly to changing customer requirements without seller intervention.

[0007] The system and method also facilitates product returns from the buyer to the outsource supplier. Specifically, when the customer requests a return material authorization (RMA), the seller creates an RMA and directs the customer to return the product to the seller for inspection as required. The seller then requests an outsource supplier return authorization (OSRA) from the outsource supplier, and delivers the returned product to the outsource supplier. The outsource supplier receives the returned product and verifies the identity of the returned product and associated OSRA. The outsource supplier receives the product into its system. The outsource supplier then inspects the parts, completes disposition and determines if the return was warranted. The outsource supplier then sends a negative shipment to the seller, effectively removing the item from the seller's inventory. When the return is determined to be justified, the outsource supplier sends a credit to the seller to match the negative shipment, thus crediting the seller's cash position.

[0008] Thus, the system and method is able to provide improved outsource supplier management by facilitating improved communication between customers, sellers and outsource suppliers.

Problems solved by technology

Unfortunately, this type of inventory system also results in increased inventory carrying costs, including costs for inventory facilities, transaction costs, and the costs associated with money tied up in inventory.

In some industries, the costs of carrying large amounts of inventory can be prohibitive.

While such systems are able to reduce inventory costs for the seller, they also introduce unwanted complexity into the transactions between buyers, sellers and suppliers.

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